The U.S. House of Representatives took a step on Thursday to pave the way for deep tax cuts sought by President Donald Trump and Republican leaders, barely overcoming a revolt within party ranks that could foreshadow trouble ahead for the tax overhaul.

The Republican-controlled House voted 216-212 to pass a budget blueprint for the 2018 fiscal year. The measure will enable the tax legislation, expected to be made public next week, to win congressional approval without any Democratic votes.

Who knows what this tax deal will look like when it gets out of the Senate? But still, it shows that Trump's popular support has withstood the media onslaught, and the tide is turning. Last February, Trump was a racist, sexist hustler that was going to put a neon sign saying The Trump House on the White House.

Now that's going away. Now a lot of people are complaining not about what he does, but his tone, or his tweets, or some other non-essential. The senators and house members are starting to feel the pressure of facing the electorate. Bannon is out there, with national money, organizing primary challenges to the uncooperative Republicans. But some of the Democrats must be feeling the heat too.

On another front: Congress is now investigating Hillary's email issues, and a witness from inside the Podesta operation has emerged, and another witness that was under a non-disclosure agreement as oart if the settlement of an investigation has been cleared to tell all to Congress. The heat is rising on the Clintons.

This is a budget that is capped at over $4 trillion -- let me write that out -- $4,000,000,000,000.00.

To give you an idea of how big a number 4 trillion is, contemplate this: If you counted every second of all of the 12,000 years of human civilization, you would be just shy of getting to 4 trillion. It's a huge number.

And it figures that tax revenues will decline, at least for a few years.

I don't argue with the choices these people are making. I accept that they know more than I do, and they are balancing things better than the previous regime. (How could they be worse? The Obamacrats never even had a budget for the last 7 years!)

But this is more debt financing. How is this different than what we call 'Keynesian economics'?

The pattern has been a doubling of the accumulated national debt every two presidential terms (every 8 years), and it looks to me as if this continues the US economy on that track. And that is scary.

I agree with the sentiment you have regarding the tax cuts.
The tax cut changes everything if passed.

While the Democrats will argue that the rich get more, which is seemingly the same tired and standard go-to for any tax cuts

Its going to be hard to campaign in a year as a Senator / Member of Congress that votes against a plan that could potentially put around 2000 bucks back in the pocket of someone making the American average salary.

Sure, someone who is making a million dollars who pays 370,000 in income tax will be getting around 30,000 back in taxes, but as much as the average person loves to harp on the wealthy, in this case their fates are largely tied together.

It's not just our debt that is worrisome, which it is, but not in a critical way. It's the American national debt that I really want to discuss, and the way it affects us.

First, the trajectory of the debt -- I have done a little research. If you look at the history of the US national debt, you can see it fighting to maintain balance, and often failing by a bit. Before Woodrow Wilson, the debt was a paltry $3 billion, but an ordinary working lout was making maybe $2 a daý. I don't know how you evaluate that. It was almost a century ago.

Until the depression. Hoover increased the national debt by a third as his response to the Depression. Then FDR increased it by 1000% (over 12 years, and included the New Deal and the World War II) But he only added $260 billion to the national debt!

In the post-war period, Truman added another 3%, but Eisenhower added 9% in his term. He built the highway system. Pure public works, pure Keynes. JFK amped up the arms race, and added 8% in only three fiscal years! LBJ got into a sinkhole in Viet Nam and added another `13%. Nixon spent a lot too, increasing the debt by 34%.

Gotta stop here. At this point, Nixon is famously stated that "we're all Keynesians now." The previous Presidents were going into debt while presiding over a prospering economy. America was an industrial power. The deficits covered by issuing bonds are increasing, but they now seem small. Eisenhower built those highways but only added $23 billion over eight years. The Kennedy-LBJ guys upped the spending, but they had a nasty war brewing in south-east Asia. They generally bopped along spending only $5 billion more than they took in.

It gets worse with Nixon. The Nixon-Ford administrations went into $345 billion in debt over 8 year, or about $40 billion annually. They doubled the national debt in eight years for the first time. (Most of it was under Ford.) Carter continued on trend, except he only got 4 years. But he added almost 50% to the national debt. People were fed up, and flocked to the new reformer ... ta-da ... Ronald Reagan.

And what did he do? He increased the national debt from one $trillion to $2.8 trillion! Most of his budgets had $250 billion deficits! He increased it -- through tax cuts -- but never did the cutting back on expenses! Bush Sr. was the same -- he added another 58% in his four years to what was then felt to be an enormous pile of debt, but which was still only $4.4 trillion when Clinton took over. Clinton did reduce the rate at which the national debt grew, but he still added $1.4 trillion over his eight years -- by increasing taxes on a now prospering economy. Good move, Bill, but not enough.

But Bush Jr doubled the national debt again, from $5.8 trillion to $11.7 trillion. And then Obama took that and ran with it -- adding another $8 trillion to the pile.

And now we have another Reagan. That is the flaw in Trump, as far as I can see. The pile of debt is likely to go from $20 trillion to $40 trillion or more And what about the next guy? Who's likely to be a left-ish celebrity ... you can feel the other billionaires getting political ambitions already. Oprah for President? Not impossible. Mark Cuban is already testing the market.

But back to my story.

What if the national debt at these levels cannot be absorbed by the capital markets, particularly at these interest rates? How long will the Chinese invest in US treasuries before it occurs to them they could just invest in China? That's probably already happening.

My point -- There is a limit. The national debt is like an insurance policy. It's the well we go to when we have to go to war or face a social emergency. It is abusive to use the national debt to pay transitory social benefits -- except in a dire emergency.

Debt at these levels, with the real inflation factored in, pays nothing. The money flows in and out of US bonds to get gains from currency fluctuations, not because they are themselves wonderful investments. The pension funds, for example, that regularly buy US treasuries because they are safe and produce an income cannot live with 1% interest rates.

We have such low interest rates because the US could not pay the interest rates that the market would demand. They would certainly have to trim their sails. Allowing US debt to pay market-set interest rates means telling social security recipients that the government screwed them.

Why? Because the interest payments will crowd pension cheques from keeping pace with inflation. We will all be on a treadmill downwards.

It boils down to this. When Reagan was going to 'the market, he had to "roll over'' the existing maturing debt and floating another $20 billion. The maturing debt would have been back-loaded, and would be from the time of LBJ and Nixon. It might have been $5 billion a month. So Reagan might have had to raise $25 billion a month, on average. But Trump will be rolling over a lot more money because Obama could only sell debt short-term, for the most part. And the total debt is $20 trillion. What part of that matures monthly, one wonders. It could be 100's of $billions, monthly. Plus he wants to raise another few hundred $billion monthly of new money.

Do you see where I am going here? Who is going to buy this stuff? Can this really go on forever?

The Wall Street Journal has reviewed a detailed summary of the soon-to-be unveiled House Republican tax plan.

“House Republicans, seeking the biggest transformation of the U.S. tax code in more than 30 years, aim to permanently chop the corporate tax rate from 35% to 20%, compress the number of individual income tax brackets, and repeal the taxes paid by large estates starting in 2024, according to a detailed summary of the plan reviewed by The Wall Street Journal.

To partly offset that lost revenue, Republicans plan to curtail the deductions individuals take for state and local tax payments and the ones businesses get for the interest they pay on debt. But the plan being released Thursday morning stops short of touching other popular tax breaks that were being considered for change, such as the ability of individuals to park up to $18,000 a year in pretax funds into 401(k) savings accounts.

The plan, named the Tax Cuts and Jobs Act, calls for leaving the top individual tax rate at 39.6%, but pushing the income threshold for that rate to $1 million for married couples. The House Ways and Means Committee plans to consider the bill next week with the aim of turning it into law by Christmas and having most of it take effect in 2018.”

The 401k deductions I thought at a minimum was going to at least be reduced;
However they seem to have accomplished what they needed to accomplish by leaving the highest individual rate @ 39.6% along with the new 12%, 25%, and 35% brackets.

The change to the Corporate Tax rate is devastating to Ontario and Quebec;
More-so to Ontario who have found alternate way to generate revenue at the expense of business.

The Canadian Federal Government has made an attempt to make business appear as though they were not paying their fair share despite the reality to the contrast;

The US Government has laid out a welcome mat to the businesses of the world.

It seems like the highest category will be very high, probably so high that it doesn't make much difference. Trump, himself, seems willing to shrug higher taxes off. So, by leaving this tax rate in place, but pushing the upper limit to $5 million or so, what's the diff? But he has undercut the Democrat sniping -- you know, a tax cut for the Donald and his friends...

I don't take issue with it as policy, but we should realize that this is a massive government stimulus to the economy. Conservatives have believed, since Reagan, that tax cuts left more money in the hands of the consumers and investors, and that this is what powers the economy. But it is not. It's another way to treat debt financing.

It might be true if the budget were balanced throughout. But the fact is that the routine operation of present-day governments -- not just in America, but in the whole western world -- routinely needs more money than it can raise by taxation or other means. It adds to the national debt to finance itself. Even Stephen Harper only balanced his budget in about a third of his term in office.

My thought is this: To test the idea, to really make it work you have to balance the budget by cutting government expenditures as well as taxes. I don't know that, but it just makes sense. Reagan's failure is that he couldn't cut government to a new size. I don't know if he tried -- he had, after all, a Democrat Congress. Since Reagan, the US normally needed at least $200 billion more than its revenues. Now, Obama has set a new normal, at $trillion a year. If trends continue, the national debt will be about $40 trillion on its way to $80 trillion for the next one.

But the American federal state, simply as a confederation of huge, semi-independent corporate organizations (even if they are in the public sphere) is now so big that parts of it can actively thwart the President's will. Trump can't seem to bring the Department of Justice, or the CIA to heel, even though he has replaced the top leader.

If these trends continue, we can start to imagine future political scenarios one notch up from where we are now. They will take us into a brave new world that we can only see in outline. In a 'mega' way, the big departments of the civil service have the potential to play the role of the barons resisting the king before Runnymede. The part of the big barons will be played by the Departments of Justice, Agriculture, Defense, the EPA, the IRS and so on. The result will be a much diminished Presidency as the Treasury Department marginalizes him. This is not a joke, just a jocular speculation. The US could face the equivalent of the Wars of the Roses in bureaucratic/organizational terms.

So, apart from the budgetary reasons, there is every reason human reason to cut these monsters back. They are no longer efficient. And for the more politically staid, consider this: small groups are more productive than big groups. Fewer layers or organization contributes to success. I don't know about the US but it's probably worse there than here. And here, I can well imagine we could get 90% of the benefit we get from the government with maybe 50% of the cost if we cut away the non-essentials. There's lots of good staid reasons to get ahead of the curve on things that will some day become emergencies.

Last edited by Bugs on Thu Nov 02, 2017 1:43 pm; edited 1 time in total

I don't take issue with it as policy, but we should realize that this is a massive government stimulus to the economy. Conservatives have believed, since Reagan, that tax cuts left more money in the hands of the consumers and investors, and that this is what powers the economy. But it is not. It might be true if the budget were balanced throughout.

The argument to be made is that individuals and business spend money faster than Government and that their transactions are taxable.

The old theory that the more hands a dollar touches the more times that dollar can be taxed.

I do agree,
Its just a different take on growing government revenue;

In the case if it attracts enough business from abroad it may be successful but I think you and I are in agreement that balancing the budget in this manner isn't ideal.

Yeah, in a way I am putting that agreement in a wider focus. I am really just putting my thoughts down in electronic blips. We have no practical disagreement.

I am older, and I remember before the welfare state, and as I step back, in my retirement, I try to put it all in a context. It's natural that our focus is different.

Also, I have never been ideological, at least in my real life. That may surprise you. I wasn't an opponent when these things were first implemented, so I remember things in a different context. I can't remember any real agitation in the community for any part of the welfare state. There was a kind of government planning around, where the government mobilized capital and set up crown corporations that were expected to run like businesses. This model was used to run utilities and other ventures. Ontario Hydro is an example -- that was brought in by a PC government., and rural Ontario had power before rural New York as a result. The historical verdict is in. You'd have to say it was a model that worked.

I feel we were at a turning point about Lester Pearson -- John Diefenbaker time, and the winners took us into a full, top-to-bottom welfare state. A lot of the motivation for this goes back to the 1930ies, and trying to head off the Bolsheviks. No kidding. But they never went to the public with that, in an election campaign. Instead, they marketed compulsory retirement plans, for example, spent the money, and left our kids holding the bag for the retirement benefits.

What was the path we didn't take? It would have been to build on our assets, including a world class working class. Instead, we threw them away in effort to become another Sweden.

Now the children of those people languish, socially stigmatized as 'rednecks' and worse, having the wrong musical tastes. Their children are pierced and tattooed and often enough addicted to opioids. The politicians gave us a different kind of country and enchanted us with notions of becoming more genuinely independent of the biggies. We were going to be sophisticates. Or, we had to save the country from separation. We never were voting on what we were actually voting on. It was always BS. And it pretty much always fooled

Which kind of society will stand up best, historically? What's your metric of success? I don't really know.

I don't know how to evaluate this appointment. I am suspicious of any banker who has inflation targets. Why would an organization legally mandated to maintain the stability of the currency be concerned because inflation is lagging below 2%?

In the drama ... er, narrative? ... sketched out for the kubuki theatre of central banking, 'inflation' is the good guy, who will make all the banking assets whole again, but in our lives, inflation is the villain which steals our purchasing power while we sleep. It's the thing that hits the most marginal hardest, and can destroy retirement planning as a concept.

So what am I supposed to think of any central banker who is worried about lagging inflation rates?

Sen. John McCain will back the Senate GOP's tax bill, increasing the plan's chances of clearing the Senate by Friday.

McCain was one of the last GOP senators who had not committed to supporting the proposal.

"After careful thought and consideration, I have decided to support the Senate tax reform bill," McCain said in a statement Thursday. "I believe this legislation, though far from perfect, would enhance American competitiveness, boost the economy, and provide long overdue tax relief for middle class families."

If McCain goes Yes, maybe this is where the Republican opposition collapses. Perhaps soon, Trump will be able to count on Republican support in a more disciplined and predictable way.

It seems likely that some Democrats don't want to vote against it. There are twenty-some senators looking for another term, and it's easily possible that three or four of them could jump. And that would make McCain really look like an asshole.

If McCain goes Yes, maybe this is where the Republican opposition collapses. Perhaps soon, Trump will be able to count on Republican support in a more disciplined and predictable way.

It seems likely that some Democrats don't want to vote against it. There are twenty-some senators looking for another term, and it's easily possible that three or four of them could jump. And that would make McCain really look like an asshole.

If McCain and Collins vote for it;
I have to wonder how unified the Democrats will be.

Voting against legislation that never comes to be is one thing, having to campaign next year as being a Democrat Senator that voted against a tax cut which came into effect is more challenging.

If it appears like it will pass on a unified GOP vote;
Will Joe Manchin, Joe Donnelly, Jon Tester, and Heidi Heitkamp end up voting for it rather than having to campaign against it?

Senate Republican leaders on Sunday touted a GOP-led Congress perhaps finally in sync and ready to hit two key deadlines -- approving a spending bill to keep the government from shutting down after Friday and the House and Senate agreeing on landmark tax-reform legislation by Christmas.

House and Senate lawmakers return to Capitol Hill on Monday to begin working on a compromise bill -- just two days after GOP senators narrowly approved their chamber’s plan on a 51-to-49 vote. The House, which has a larger Republican majority, approved its version last month.

“People wanting to keep more of their hard-earned money. That's what you see in the bills,” said Barrasso, amid the large focus on the bills’ differences. “Absolutely there are some changes that still need to be made in conference to work these things out.”

We are one step closer to delivering MASSIVE tax cuts for working families across America. Special thanks to @SenateMajLdr Mitch McConnell and Chairman @SenOrrinHatch for shepherding our bill through the Senate. Look forward to signing a final bill before Christmas! pic.twitter.com/gmWTny3SfS
— Donald J. Trump (@realDonaldTrump) December 2, 2017
Among the big differences: The Senate bill cuts individual taxes only through 2025, and repeals the requirement, or mandate, that Americans must buy health insurance under ObamaCare.

However, the separate bills each reduce the corporate tax rate from 35 percent to 20 percent and eliminate state and local tax deductions while doubling the standard deduction for individual filers.

“Members from the House and the Senate will get together to look for the best solutions,” Barrasso also said.

He struck an upbeat tone, compared to what fellow GOP senators were saying after they failed this summer to repeal and replace ObamaCare -- hurting their chances of keeping control of Congress in next year’s congressional elections and denying Trump his first, major legislative victory.

Congress has not passed major tax reform in roughly three decades, and Trump is eager and equally optimistic about success.

“We are one step closer to delivering MASSIVE tax cuts for working families across America. Special thanks to @SenateMajLdr Mitch McConnell and Chairman @SenOrrinHatch for shepherding our bill through the Senate. Look forward to signing a final bill before Christmas!” the president tweeted hours after the Senate passed its bill at about 2 a.m. Saturday.

Also on Sunday, Senate Majority Leader Mitch McConnell sounded confident that Congress will get enough bipartisan support to pass a temporary spending bill before the federal government runs out of money on Friday, amid concerns that Democrats will withhold votes unless the measure included a fix to the expiring immigration program known as the Deferred Action for Childhood Arrivals, or DACA.

“There’s not going to be a government shutdown. It’s just not going to happen,” the Kentucky Republican said on ABC’s “This Week,” while also pointing out that Trump has given Congress until March to make the fix.

“I don’t think the Democrats would be very smart to say, ‘We want to shut down the government over a non-emergency that we can address any time between now and March,' "McConnell also said.

Republican congressional leaders received a good signal Saturday that House conservatives, who frequently oppose leadership-driven measures, appear ready to vote yes on a final tax deal.

”Now comes the final step,” said North Carolina GOP Rep. Mark Meadows, chairman of the conservative House Freedom Caucus. “Now is the moment in which both chambers must come together, work out our differences, and finish what we’ve begun.”

Still, Maine GOP Sen. Susan Collins, known to put the concerns of home state voters ahead of Senate leadership’s, suggested her final vote will depend on what the so-called House and Senate “conferees” decide.

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